Greece's finance minister George Papaconstantinou at a news conference in Athens, May 2 2010. Greece has agreed a package of austerity measures with the EU and IMF under which it will cut the deficit by 30 billion euro over three years, Papaconstantinou said.
Domestic resistance to the 110 billion euro deal for euro zone members and the International Monetary Fund to bail out Greece widened on May 3 2010 as local administration members went on strike in protest against the agreement.
Greek news agency News In, quoted by Bulgarian news agency Focus, said that the Greek federation of workers in local government declared a 24-hour strike on May 3, and were to decide whether to continue the strike on May 4 and 5.
A general strike has been called for May 5, in which private sector employees will join and in which members of the federation of journalists’ trade unions will take part.
The 110 billion euro bail-out deal, of which 80 billion euro will come from the Eurogroup, was agreed to on May 2 by prime minister George Papandreou’s cabinet, with Papandreou saying that his government would make far-reaching austerity cuts and warning that the country would have to make "great sacrifices".
The deal is still subject to approval by some parliaments in the 16-member euro zone, the BBC said.
As reported by the Voice of America, Greek finance minister George Papaconstantinou said on May 2 that the belt-tightening measures would help his country get back on its feet.
"These measures have a counterpart and the counterpart is the significant financial help through this mechanism that we helped create and which is a step, a big step forward for the European Union," Papaconstantinou said.
"Through this mechanism and this financial help Greece will be shielded from the international markets and will be able to put its house in order."
In Brussels, finance ministers from the 16 EU nations sharing the euro currency, including Greece, met to give final approval to the rescue package. The final deal is expected to be endorsed by European leaders at a special summit later in May.
As he arrived at the May 2 meeting, EU Monetary Affairs Commissioner Olli Rehn gave a thumbs-up to the new Greek spending cuts.
"The Greek government has today announced a very comprehensive and ambitious economic program which I indeed welcome," he said. "I'm confident that the eurogroup, the euro area member states, will today endorse this program and I'm recommending to the eurograoup today to activate the [aid] mechanism."
In a joint statement the same day, Rehn and IMF managing director said "We strongly support the economic programme announced today by the government of Greece.
"The steps being taken, while difficult, are necessary to restore confidence in the Greek economy and to secure a better future for the Greek people. The programme is unprecedented in the scope of the national effort required, as well as in the scale of the financial support - 110 billion euro - being provided by euro area countries and IMF. We are confident that Greece will rise to the challenge and succeed.
"We recognise that the program demands great sacrifice from the Greek people and, given the serious situation facing their country, it cannot be expected to turn the economy around overnight.
"A sustained, multi-year effort will be needed to bring down Greece's debt and spur competitiveness. If implemented effectively--and we believe it will be--the program will lead to a more dynamic economy that will deliver the growth, jobs , and prosperity that Greece needs in the future," the joint statement said.
"We believe that the programme is the right thing to do to put the economy back on track. Importantly, the authorities' have also designed their programme with fairness in mind so as to protect the poorest and most vulnerable, and ask for a fair sharing of the burden across Greek society. That is the right thing to do as well.
"To be successful, the programme will require a national commitment that goes beyond political party lines. The support from European countries, the European Commission and the European Central Bank, and the IMF demonstrates a very high level of external commitment --and attests to the goodwill for Greece from the international community. Our collective effort will also contribute to the stability of the euro and will benefit all of Europe."
In a statement by the Spanish presidency of the EU, Spanish economy and finance minister Elena Salgado said that the Spanish contribution to aid Greece would be 9.7 billion euro for the three-year period from 2010 to 2012, of which 3.6 billion will be paid this year, as agreed in April.
"For Spain, in this year 2010, (the contribution will be) the same amount as initially agreed: 3.672 billion euro. And in total, over the three years, 9.792 billion, 12.24 per cent of the total 80 billion".
Salgado said that, unlike other euro zone countries, the Spanish contribution to Greece need not pass any parliamentary proceeding, but it can be approved "by decree law", which will happen "probably on the seventh", in order to "provide aid for Greece immediately".
Salgado said that the European Commission would be responsible for setting the schedule in which the member states must make funds available but emphasised that "Greece needs the first contributions on May 19" and she said that "the first part will be available before that date".
She described as "very ambitious" the adjustment plan announced by the Greek government, with which Athens plans to save 30 billion euro, 11 per cent of its GDP, to reduce its public deficit to less than three per cent in 2014.
Eurogroup president Jean-Claude Juncker told a news conference that "we have decided to activate the aid plan for Greece".
Juncker said that the Greek authorities will have the money in time for May 19, the due date of an important Greek public debt.
In a statement posted on its website on May 3, the European Central Bank announced a change in eligibility of debt instruments issued or guaranteed by the Greek government.
"The Governing Council of the ECB has decided to suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for the purposes of the Eurosystem’s credit operations in the case of marketable debt instruments issued or guaranteed by the Greek government. This suspension will be maintained until further notice."
The suspension applies to all outstanding and new marketable debt instruments issued or guaranteed by the Greek government, the ECB said.
In its own statement, the Eurogroup said that its members "concur with the (European) Commission and the ECB that market access for Greece is not sufficient and that providing a loan is warranted to safeguard financial stability in the euro area as a whole".
"The Eurogroup is confident that the ambitious fiscal adjustment and comprehensive structural reforms under the Greek authorities' programme are appropriate to stabilise the fiscal and economic situation and address the fiscal and structural challenges of the
Greek economy in a decisive manner," the Eurogroup statement said.
"The programme is supported by strong conditionality. It will thereby also help restore confidence and safeguard financial stability in the euro area."
The Eurogroup said that it welcomed the efforts to date by the Greek government to "resolutely address the fiscal imbalances as well as the new measures announced today in the framework of a three-year programme agreed with the European Commission, the ECB and the IMF, which is also announcing its staff-level agreement with Greece on a standby arrangement".
European Council President Herman van Rompuy said that he was "convinced" that this "sound and ambitious programme" will enable Greece to put right its economic and financial situation as well as its competitiveness.
He said that he would convene the heads of state and government of the euro area for a meeting on the evening of May 7 in order to conclude the whole process and to draw the first conclusions of this crisis for the governance of the euro area.